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Phuket hoteliers looking to winter wonderland to bolster the Sandbox

Bill Barnett

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by Bill Barnett from c9hotelworks.com

As the Phuket Sandbox program continues to be the international gateway for overseas travellers to Thailand, island hoteliers are looking at what the winter season could look like. Traditionally a legacy market, many visitors during this period are called ‘snowbirds’ and are from Northern and Eastern Europe.

Snowbird travellers are long-stay visitors, with a key source, like Russia having an average length of stay of 11 or 12 nights. This makes it a natural fit for the Sandbox 14 day stay requirement (although you can stay for a shorter period if you want).

One key trigger for the Eastern European market, or mainly Russia, is that vaccinated travellers are likely be have injections of the Sputnik vaccine. Word this week in Thailand reportedly is that the country is set to approve Sputnik within August. The timing could not be more critical for hoteliers and tourism businesses looking at the peak Russian arrival months to Phuket which are November through March. Looking back at 2019, over 700,000 Russian travellers arrived directly at the island’s gateway airport.

Adding perspective to look forward is C9 Hotelworks newly released Phuket Hotel Market Update report that highlights that International visitors are an important foundation in driving tourism growth in Phuket.

According to the Airports of Thailand, international passenger arrivals increased for ten consecutive years to reach a record of 5.3 million in 2019 before decreasing by 80% to 1.1 million in 2020 due to travel restrictions under the Covid-19 pandemic. While this year total passenger arrivals between January to July dropped to 0.4 million from 1.9 million passengers in 2020.

Phuket hoteliers looking to winter wonderland to bolster the Sandbox | News by ThaigerPhuket hoteliers looking to winter wonderland to bolster the Sandbox | News by ThaigerIn FY2020, the market-wide ADR was propped up by the government’s ‘We Travel Together’ program. However, the Bangkok travel restrictions have effectively negated the domestic market and made the island reliant on Sandbox travelers. This has pushed market-wide demand into double digits, though rates have dropped.

Phuket became the first province in Thailand to welcome back international visitors without quarantine requirements. Based on the Tourism Authority of Thailand, the reopening of Phuket quadrupled its room night demand in July, with further gains registered in August.

Under the Sandbox program in July, there were 14,055 international passenger arrivals with nearly 200,00 room nights booked. Looking at August by month end, arrivals are set to show growth and looking at September bookings the growth trend is set to continue.

The seventeen months of the ongoing pandemic have weighed heavily on hotels under development where 67% of pipeline project projects have been delayed, mostly to 2023-24. The West Coast remains the most popular development area, led by Kamala, Patong, and Layan. Despite the ongoing Covid-19 impact on hotel owners, only two significant transactions of hotels occurred this year, though more are expected over the new 12-18 months.

For now, the impact of the Phuket Sandbox has clearly brought a demonstrated improvement to island hotels but the bigger questions that tourism businesses are asking is, what comes next?

 

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Bill Barnett has over 30 years of experience in the Asian hospitality and property markets. He is considered to be a leading authority on real estate trends across Asia, and has sat at almost every seat around the hospitality and real estate table. Bill promotes industry insight through regular conference speaking engagements and is continually gathering market intelligence. Over the past few years he has released four books on Asian property topics.

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